Financial Fraud: Group of Individuals Charged in Connection With Schemes To Illegally Redeem Food Stamp Benefits in Exchange For Cash

12 Defendants Charged Federally with Collectively Receiving Over $20 Million from USDA by Fraudulently Trading Food Stamps for Cash

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12 Defendants Charged Federally with Collectively Receiving Over $20 Million from USDA by Fraudulently Trading Food Stamps for Cash

Twelve retail store owners, operators, and clerks, have been charged in connection with schemes to illegally redeem food stamp benefits in exchange for cash.

Benjamin G. Greenberg, Acting United States Attorney for the Southern District of Florida, Karen Citizen-Wilcox, Special Agent in Charge, U.S. Department of Agriculture, Office of Inspector General (USDA-OIG), George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Brian Swain, Special Agent in Charge, U.S. Secret Service (USSS), made the announcement.

The indictments allege that the retailers received more than $20 million in federal payments for transactions in which they did not provide any food, a fraud scheme commonly known as “food stamp trafficking.” Stores and vendors allegedly took illicit profits from the fraudulent transactions with food stamp recipients. This operation resulted in the largest combined financial fraud loss for a food stamp trafficking takedown in history.

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“The Supplemental Nutrition Assistance Program offers nutrition assistance to millions of eligible, low-income individuals and families while providing economic benefits to communities,” stated Acting United States Attorney Benjamin G. Greenberg. “The exploitation of participants in the program by providing cash instead of nutrition for financial gain is criminal. The U.S. Attorney’s Office and our law enforcement partners are committed to investigating and bringing to justice those who engage in these fraudulent schemes.”

“The USDA-OIG conducts hundreds of criminal investigations relating to SNAP fraud across the nation each year. In this instance, eight small convenience stores in south Florida committed a staggering amount of fraud in a relatively short amount of time. These retailers created an illegal benefits exchange system that defrauded the American taxpayer and denied healthy foods to needy children and their families. The storeowners who allegedly orchestrated this trafficking scheme pocketed millions in “fees” which they charged for converting food assistance benefits into cash. Any retailer who chooses to defraud taxpayers through such schemes will continue to be aggressively investigated and prosecuted by USDA-OIG and its law enforcement partners,” stated Karen Citizen-Wilcox, Special Agent in Charge, USDA-OIG.

The Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp Program, is a federally funded, national program established by the United States government to alleviate hunger and malnutrition among lower income families. The United States Department of Agriculture (USDA) administers SNAP through its agency, the Food and Nutrition Service (FNS). FNS is responsible for the authorization and disqualification of retail food establishments participating in the redemption of SNAP benefits.

In Florida, SNAP is administered by the State of Florida Department of Children and Families (DCF). DCF is responsible for overall program administration, as well as approving, denying or revoking assistance for recipients. FNS and the State of Florida share jointly in the cost of administering the SNAP. In 1998, DCF changed the format of SNAP benefits in Florida from a traditional paper coupon system to an Electronic Benefit Transfer (EBT) card system. Recipients use the EBT card, which contains an embedded magnetic strip, to purchase approved food items from participating retailers. Retailers must apply to and be approved by FNS to participate in the program. Authorized retailers use a point-of-sale (POS) terminal that checks the EBT card information and deducts the cash value of the purchase from the customer’s SNAP benefit balance. SNAP reimbursements are paid to retailers through electronic funds transfers. Retailers bill the government in return for providing approved food items. SNAP retailers, including the defendants, receive instruction regarding the requirements and regulations of the food stamp program, such as that only eligible food items can be exchanged for EBT benefits and that a retailer may never exchange EBT benefits for cash or non-food items.

According to some of the indictments listed below, the defendants owned, operated, or worked at stores in the Southern District of Florida that were authorized to accept SNAP. In other indictments, the defendants owned, operated, or worked at stores in the Southern District of Florida who were not authorized to accept SNAP but instead unlawfully utilized the POS terminals of authorized retailers. The defendants received instruction regarding the requirements and regulations of the food stamp program. The defendants allegedly exchanged EBT benefits for cash, in violation of the food stamp program rules. The defendants and/or their co-conspirators/employees swiped the recipient’s EBT card at a POS machine for an inflated amount, and paid the recipient, in cash, a reduced percentage of the value of food stamp benefits charged on the card. The defendants would realize a guaranteed, significant profit from each fraudulent transaction. In most situations, the recipient did not actually receive any food or eligible items in return for their food stamp benefits. As a result of the unlawful cash transactions, the defendants fraudulently obtained more than $20 million dollars in EBT deposits for transactions in which the stores did not provide food.

1. United States v. Hasan Saleh, et al., Case No. 17-20653-CR-Moreno

According to the indictment, Hasan Saleh, 59, managed a convenience store, Four Corners, located at 821 Northwest 6th Street, Fort Lauderdale, Florida. Despite not being authorized to participate in SNAP, Four Corners employees, including Saleh, were involved in a scheme in which they exchanged food stamp benefits for cash. These transactions were carried out using equipment registered to the convenience store Sparkle, located at 6530 NW 18th Avenue, Miami, Florida. Defendant Mohammad Alobaisi, 37, was the sole officer, director, and registered agent of Sparkle. Additionally, employees of Sparkle participated in the scheme by exchanging food stamp benefits for cash. Between April 2015 and August 2017, Saleh and Alobaisi, together with their employees, Reynold Francois, 38, Ihab Hassouna, 44, Mohammad Alteen, 33, Maria Jerdana, 36, and Joe Ann Baker, 56, redeemed and caused to be redeemed approximately $2 million in EBT food stamp benefits from the FNS.

On September 20, 2017, Yousef Homedan Zahran, a/k/a “Yuousef Hussein,” a/k/a “Joe,” 60, of Pompano Beach, was charged by complaint in connection with a food stamp fraud scheme. According to court documents, Zahran, worked as a clerk at a convenience store, Muna & Mona Inc., d/b/a Community Food Store #5, located at 401 NW 27th Avenue, in Pompano Beach, Florida. On multiple occasions between November 3, 2016, and January 11, 2017, Zahran illegally sold food stamp benefits in exchange for cash.

According to the indictment, Omar Hajje, 43, of Miami, and Jalal Hajyousef, 42, of Miami, owned and operated convenience and grocery stores in Miami known as Steve Market 2 and Yum-Yum’s Grocery, located at 6804 NW 15th Avenue and 6813 NW 15th Ave in Miami, respectively. Omar Hajje applied for and obtained authorization for each of the two stores to participate in SNAP. From July 2014 through the date of the indictment, September 2017, Omar Hajje and Jalal Hajyousef were involved in a fraud and money laundering conspiracy in which they exchanged food stamp benefits for cash and fraudulently redeemed approximately $4.2 million in EBT food stamp benefits. Hajje and Hajyousef laundered the fraud proceeds through various accounts, by writing cashier’s checks, and by converting EBT funds to cash.

According to the indictment, Andy Javier Herrera, 24, of Little Havana, owned a small grocery store, Santa Ana Market II, located at 1832 NW 17th Ave., Miami, Florida. Herrera applied for, and obtained, authorization to participate in SNAP. Javier Herrera, 49, of Coral Way, was a clerk that worked at both Santa Ana Market II, and a nearby convenience store named Santa Ana Market, located at 3000 NW 12th Avenue, Miami, Florida. Between April 2012 and September 2017, Andy Herrera and Javier Herrera were involved in a scheme in which they exchanged food stamp benefits for cash. During that time, Andy Herrera and Javier Herrera fraudulently redeemed approximately $10,000,000 in EBT food stamp benefits.

Acting U.S. Attorney Greenberg acknowledged the dedicated efforts of the Florida Department of Children and Families and the Florida Department of Financial Services to provide services to the community and identify for prosecution those individuals who compromise public benefits. Mr. Greenberg also commended the investigative efforts of USDA-OIG, FBI and USSS, and expressed his gratitude to FLPD, DBPR-ABT, MPD and MDPD for their assistance with the investigation and law enforcement operation. Mr. Greenberg recognized Assistant United States Attorneys Yeney Hernandez, Lisa Miller, Frederic Shadley, and Anne McNamara, who are prosecuting these cases.

A complaint or an indictment is only an accusation and a defendant is presumed innocent unless and until proven guilty in a court of law.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

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